"Staffed
almost entirely by ex-government officials and investing
primarily in defense companies that derived most of
their revenues from government contracts, the Carlyle
Group for much of its existence occupied a dismal niche
a cranny inhospitable to democracy, fairness,
and free enterprise." Such is Daniel Gross's assessment
in a recent piece in Slate.

Carlyle
invested primarily in the defense industry, making its
money through connections alone. In the '90s, Carlyle
concentrated on buying companies that needed government
patronage for business. Much was in the defense field.
Over the last decade, Carlyle has grown to include investments
in most corners of the world. It is now in basically
one of the nation's biggest defense contractors and
well established in global telecommunications. Lelsie
Wayne writes "Its blue-chip investors include major
banks and insurance companies, billion-dollar pension
funds and wealthy investors from Abu Dhabi to Singapore."

But
skills rooted in connections often have little to do
with being a real businessperson. Gross writes "Soon
after it bought airline services company Caterair, and
placed George W. Bush
on the board, that company cratered." Even so,
the company prospered from its combination of connections
and willingness to take money from most anything.

Now,
like a Mafia family trying to go legit, defense connections
remain an important, but now secondary element in Carlyle's
dealings. They made too much money off taxpayers to
simply stay in their old field. Carlyle even hired some
genuine businesspeople to manage the company's major
decisions, turning it into a strange kind of hybrid.
At one level it looks like a normal business. It isn't
nearly as secretive as it used to be. At another level,
it is rooted in political connections and the most cold
blooded way of making money arms no matter how
undemocratic the government that uses them.

Crony
capitalists
Carlyle specializes in investing in firms or areas which
are greatly affected by change in governments. In simpler
terms, it means they try to take advantage of how public
policy is made, and buy firms where those policies affect
industry profits. This area is not covered by laws against
lobbying by former government officials, and they have
flocked to it.

Having
connections with government leaders pays in two ways.
First, you can get the inside skinny on what's up policy
wise, and make a killing on it. Second, once those leaders
are out of power, you can offer them a great position
where connections lead to enormous profits. That, of
course, encourages them to co-operate with you while
they are in power.

So
who gets the swag?

Former
US President, George Bush, Sr. Carlyle Senior
Advisor

Former
Reagan Secretary of State, James Baker Carlyle
Senior Counselor

Carlyle
maintains that it does not lobby federal government
officials, and therefore claims to avoid conflicts of
interest. But that is largely because the lobbying laws
do not cover what they do. Why then so many former government
officials? Why the reliance on such good political connections
rather than, say, simple analysts? This isn't just charity
for unemployed politicians.

Leslie
Wayne continued in an excellent study: "Carlyle
is as deeply wired into the current administration as
they can possibly be," said Charles Lewis, executive
director of the Center for Public Integrity, a nonprofit
public interest group based in Washington. "George
Bush is getting money from private interests that have
business before the government, while his son is president.
And, in a really peculiar way, George
W. Bush could, some day, benefit financially
from his own administration's decisions, through his
father's investments. The average American doesn't know
that and, to me, that's a jaw-dropper."

Weapons
for defense or weapons for Carlyle?
For example, when several important defense contracts
were under consideration in February 2001, Donald
Rumsfeld met privately with Chairman and CEO
Frank Carlucci, Reagan's former defense secretary. These
guys would probably claim it was just a meeting between
friends. But that's just the point. Does friendship
translate into business deals? Ask anyone who joins
the Chamber of Commerce, a country club, or all the
other places where business and friendship meet, blur,
and combine.

According
to two internal Defense Department documents, quoted
in the Village Voice, Carlucci and Rumsfeld are
very close. "Dear Don," reads Carlucci's note,
dated February 15, 2001 on Carlyle stationery, "Thanks
for the lunch last Friday. It was great seeing you in
such good spirits even if you are 'all alone.'"

In
February 2001 the Defense Department was deciding whether
to continue or discontinue certain military contracts.
So the note on company letterhead creates an
appearance of a conflict of interest. For five years
prior to that February meeting, Carlucci was trying
to sell the the Defense Department 482 Crusader armored
vehicles, over $11.2 billion dollars worth of them.
The Village Voice editorialized that "he
might as well have been going door to door with vacuum
cleaners." On the campaign trail in 2000, George
W. Bush panned them: "It looks like it's too heavy;
it's not lethal enough. There's going to be a lot of
programs that aren't going to fit into the strategic
plan for a long term change of our military." Carlyle
might not make a killing either.

But
Bush must not have known the extent to which Rumsfeld
and Carlucci are such good friends. In March 2002, Rumsfeld
gave the go-ahead for United Defense to continue work
on the development of the Crusader, depositing nearly
$470 million into Carlyle's coffers. According to Eric
Miller, a defense analyst for the Project on Government
Oversight, "The Crusader has been the GAO's poster-child
for bad weapons development. Influence is tough to measure,
but it's certainly had a friend somewhere." We
may be in a big deficit, but no deficit seems too big
to withhold help from well placed corporations.

The "Iron Triangle": defense, government
and industry
Carlyle's own marketing literature calls itself "a
vast, interlocking, global network of businesses and
investment professionals." This includes not just
American politicians, it includes former political leaders
from all over the world. While their interests as citizens
of their respective nations might conflict, their private
interests as people interested in money can harmonize
greatly. The result can be serious conflicts of interest.

For
example, The Carlyle Group had long worked with the
Saudi government and the bin Laden family. Before 9-11
though, Bush "41" had made two trips to Saudi
Arabia to meet with the "Binladins" (they've
changed their name) on behalf of Carlyle. Not surprisingly,
father and son discuss political issues together. Might
this be why the US has treated Saudi Arabia with kid
gloves, despite the fact that nearly all the men involved
in 9-11 were Saudi nationals? (And none were Iraqis?)
Our point is not that George H. W. Bush and son prefer
making money even at the cost of thousands of American
lives. Our point is that such close intertwining of
politicians and business create at the minimum, apparent
conflicts of interests, and can very well influence
what the see, or choose to see, in the behavior of others.
People are thrown off juries for far less.

George
W. Bush is in a position to make budgetary decisions
and policy decisions which could affect his father's
bank accounts. This example is perhaps the most frightening.
Bush the Elder had once spearheaded Carlyle's effort
to purchase KorAm Bank and Mercury, a telecom company
in South Korea. The success of the business hinges on
the stability between the North and the South Koreans.

Shortly
after his inauguration in 2001, Bush broke off talks
with the North Koreans about their long-range ballistic
missiles. The news hocked the South, as they had been
dealing for years negotiating with the North, in partnership
with the Clinton administration. Six months later, Bush
reopened negotiations only after urging from his own
father. Red Herring reported that, according
to reports, the former president had sent his son a
memo persuasively urging him to work with the North.

Whether
or not there is evidence linking the policy decision
of the Bush administration to reopen negotiations with
the North Koreans with the personal financial status
of the former president is in some ways almost moot:
"Whether the decisions made by the former president
are a real or apparent conflict of interest doesn't
matter, because in the public's eye they're equally
as damaging," says Larry Noble, executive director
and general counsel of the Center for Responsive Politics.
"Bush [Sr.] has to seriously consider the propriety
of sitting on the board of a group that is impacted
by his son's decisions."

Most
interesting perhaps, for people calling themselves businessmen
and saying they favor a conservative agenda, since the
source of their profits is connections with government,
they need big government and big spending. It
is what got them to where they are today, and how they
can hold out the promise of even more wealth to today's
politicians, when they leave their supposed service
to the public to serve themselves.